Finance Commission
The Fifteenth Finance Commission holds meeting with the Government of Madhya Pradesh
The 15th Finance Commission headed by Chairman, Shri N.K. Singh alongwith its Members and senior officials met today with the Shri Kamal Nath, Chief Minister, Madhya Pradesh alongwith his Cabinet colleagues and senior State Government officials.
The Commission observed that:
- The State’s contribution to GDP of the country was 4.3% in 2018-19.
- In 2018-19, the share of primary, secondary and tertiary sector in GSVA  of the State was 44%, 20%, & 36%, respectively.
- In 2018-19, per capita NSDP of the State was Rs. 90,998 against per capita income of Rs. 1,26,406 for India.
- State’s share in inter-se devolution was 7.548 based on the recommendations of FC-XIV, which is much larger than its share of 5.9% in total population of the country.
On the State’s Fiscal parameters, the Commission noted that:
- The State has been maintaining revenue surplus since 2004-05.
- Growth rate of GSDP  of the State has fluctuated widely during 2012-13 to 2018-19 , compared to GDP  of India.
- Though fiscal deficit to GSDP of the State has declined from 4.3% in 2016-17 to 3.1% in 2017-18, it is still above the prudent limit of 3%.
- Debt-GDSP of the State has risen from 22% in 2013-14 to 23.9% in 2017-18.
As per the Memorandum submitted by State Government, there was a GST revenue shortfall of Rs. 3,458 crore for State in 2017-18 as compared to the protected revenue, which is more than 26% shortfall.
Though agriculture, forestry and fishing sector has grown at an average annual growth rate  of 9% from 2011-12 to 2018-19 in State of Madhya Pradesh, the growth rate has been highly volatile, with zero growth in 2013-14 & 2015-16.
Regarding the Health & Education Outcomes of Madhya Pradesh, the Commission observed that the performance of State on several health indicators is poorer than all India’s average, and the State also performed poorly on learning outcomes.
The DISCOMS of State have witnessed continuous rise in AT&C losses from 23.9% in 2015-16, 26.5% in 2016-17 to unacceptably high level of 29.7% in 2017-18, which ideally should have declined to 19.1% in 2017-18 as per UDAY MoU.
On Farm Loan Waiver, the Commission observed that the State Government has been implementing Rs. 50,000 crore farm loan waiver programme since 2018-19 to provide relief to farmers upto Rs. 2.00 Lakh.
The other fiscal parameters of concern were:
- In 2011-12, the population below poverty line was 31.7% in the State against the all India average of 21.9% .
- Among 29 states, the State of MP ranks 21st on overall Sustainable Development Goals.
- As pointed out in the note provided by AG, Madhya Pradesh, the Water Resources Department, Public Works Department and Narmada Valley Development Authority had 242 incomplete projects valued at Rs. 9,557.16 crore with cost over-run of Rs. 4,800.14 crore in 24 projects as on 31st March, 2017.
- The accounts of 29 working PSUs / Corporations  and seven non-working PSUs / Corporations  are in arrears of one to 27 years as on 31st December, 2017.
- During 2012-17, the State Government incurred a loss of Rs. 4,857 crore on account of difference between the Government’s borrowing cost and the return on investment on working PSUs. Further, the State Government incurred a loss of Rs. 1,712 crore on account of difference between the Government’s borrowing cost and the loans advanced over the past five years.
The main suggestions of the State of Madhya Pradesh to the Finance Commission include –
- Raising of taxes devolved to States from 42% to 50%.
- Composite population index, per capita income distance, area, forest area be included in the parameters for horizontal devolution.
- Capital expenditure should be part of total expenditure assessed; grants should just be deficit grants.
- Grants for disaster management.
- Performance based incentives on the themes of Financial Management and achievements in social sector.
- Sector specific grants amounting to Rs. 6721.8 crore for –
- Welfare of tribal population.
- Education.
- Health.
- Agriculture.
- Compensatory grants for shortfall in tax devolution.
Earlier the Commission had a detailed meeting with the representatives of all the political parties in the State including Bhartiya Janta Party, Indian National Congress, Smajwadi Party and Bahujan Samaj Party. All the issues raised by the parties were noted by the Commission for addressing at the time of framing its recommendations.